The Joy Theatre, one of four historic theaters in downtown New Orleans, will reopen as a live music and entertainment venue early next year after a $5 million renovation by NOLA Theatre District LLC, the development company announced Friday.

NOLA Theatre District purchased the Canal Street theater, closed since 2003, from ESE Enterprises, a family trust with more than a dozen members, for $1.5 million after negotiating for more than two years, said Neal Hixon, a developer and partner in the development company.

“We’ve spent a long time working on this project,” said Hixon, who was a lead developer in the effort to transform the Arabella Bus Barn on Magazine Street into a Whole Foods Market. “We think it’s going to be a great addition to Canal Street.”

The Joy Theatre closed more than eight years ago, finally succumbing to the competition from megaplexes with stadium-style seating and a dozen or more screens.

When it reopens next year, it will no longer be competing with those theaters, Hixon said. The Joy will be reborn as a live music venue. The theater also will host comedy tours and be available for private functions and corporate events, Hixon said.

Current renovation plans call for keeping the theater’s exterior intact, restoring it to the way it looked on opening day in 1947, Hixon said. But the inside of the theater will be completely remodeled.

“It’s a complete gut and redo. It’s been neglected,” Hixon said. “We’re going to take it down to its bare walls.”

NOLA Theatre District LLC, a team comprising developers, Hixon and Joe Jaeger, and business owners, Allan McDonnel and Todd Trosclair, plan to use a variety of tax incentives, including state and federal historic tax credits and the Louisiana Live Performance District tax credit, to complete the renovation.

McDonnel’s company, The McDonnel Group, will act as general contractor on the project. AllStar Electric, which Trosclair owns, will oversee electrical repairs. Jaeger’s The MCC Group will oversee the design and installation of the mechanical systems.

The Joy Theatre opened in 1947 at the corner of Elk Place and Canal Street and was hailed then as “New Orleans’ newest and most modern film temple.” The 1,250-seat, three-screen theater at one time contained a soundproof, glass-enclosed “crying room” for parents with babies. The theater showed first-run movies every decade since it opened, culminating with “Drumline” in 2003.

The redevelopment of the Joy will continue a recent spate of improvements to that section of Canal Street, which has spent years in decline, said Kurt Weigle, president and chief executive officer of the Downtown Development District. Weigle pointed to the 1201 Canal condominiums directly across the street from the Joy, the recently opened New Orleans BioInnovation Center about two blocks away and the in-repair SaengerTheatre, positioned diagonally from the Joy, as signs of improvement.

“This is part of a clear trend of revitalization,” Weigle said.

The purchase of the Joy, along with construction at the Saenger, also means two of the four historic theaters in downtown New Orleans are on the road to restoration. Efforts to renovate and reopen the other two, the Orpheum Theater and the Loews State Palace Theater, have stalled.

“We don’t expect that all four of the historic theaters along Canal Street will be brought back just as they were in their heyday,” Weigle said. “But the important thing is that they will be brought back in a way that’s going to contribute to Canal Street.”

Weigle said the Downtown Development District is working to have all four theaters reopen, each with a distinct and different purpose so they don’t cannibalize one another.